Mortgage applications rise 2.3%, led by homebuyers

Buyers are returning to the housing market in ever growing numbers, as indicated by continued gains in loan applications to purchase a home.

Total mortgage application volume rose 2.3 percent week to week on a seasonally adjusted basis for the week ending April 17th, according to the Mortgage Bankers Association (MBA). The gain was driven largely by purchase applications, not refinances, even despite lower mortgage rates.

"Purchase applications increased for the fourth time in five weeks as we proceed further into the spring home buying season," said Mike Fratantoni, chief economist for the MBA. "Applications for FHA [government insured] purchase loans remained strong as well."

Mortgage applications to buy a home increased 5 percent from the previous week and are now 16 percent higher than the same week one year ago. Applications to refinance increased just one percent, but they are still up 41 percent from a year ago, when rates were considerably higher, around 4.25 percent.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) last week decreased to 3.83 percent, its lowest level since January 2015, from 3.87 percent, with points decreasing to 0.32 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans, according to the MBA survey.

Rates haven't moved very much lately, which may be why homeowners have seen little incentive to refinance.

"In general, there's a pervasive air of dispassionate complacency," wrote Matthew Graham of Mortgage News Daily, regarding what he called the "flatness" of rates. "It would be easy to assume that the gorilla will reach the room when the Fed Announcement comes out next Wednesday, but then again, markets might be let down by a lack of 'clues' regarding the Fed's rate hike timeline."

While most analysts expect rates to rise through the course of this year, some now believe they could go even lower, given how little overseas bond markets have to offer investors. If investors continue to buy U.S. Treasury bonds, and if a still slow housing market means fewer-than-average mortgages and mortgage-backed securities are issued, rates in fact could move lower.